Gene Sperling: GOP has plenty of leverage without default threat

A top adviser to President Barack Obama on Friday said Republicans will have plenty of negotiating leverage to help strike a budget deal even if they take the threat of a government default off the table.

National Economic Council Director Gene Sperling downplayed the idea that Republicans would be “surrendering” if they agree to raise the debt ceiling without receiving any policy concessions from Democrats.

Text Size

-

+

reset

“When you have divided government, it is not correct that one side has to feel that if they were to open the government or take away the threat of default, they somehow lose their leverage,” Sperling said at conference hosted by the the Institute of International Finance, a bank trade group. “In divided government, you by definition have leverage because each side has gains and policy achievements that they cannot achieve without the cooperation of the other side.”

On its face, Sperling’s comments amount to a Civics 101 discussion, but they also indicate the White House wants to temper any talk that a debt ceiling increase is a defeat for Republicans as the two sides try to hammer out a deal that would raise the debt ceiling and open the government — even if only for a few weeks or couple of months.

He reiterated that the president will not negotiate with Republicans under the threat of default but that once this is out of the way, the White House stands ready to negotiate a budget deal — large, small or medium.

“If you essentially reward a faction of our government for saying they will put the country into default if they do not get their policy concessions, what that would do is essentially sanction that kind of negotiation or extortion and ensure that it continues and becomes a routine part of our form of governing,” Sperling said.

His speech also touched on the proposal from some lawmakers to “prioritize” Treasury payments to ensure that bondholders of U.S. debt are paid first — an idea Sperling called “disturbing.”

Sperling’s comments came well into the second week of the partial government shutdown and amid fresh signs of movement on the issue of raising the nation’s borrowing limit.

House Republicans this week floated the idea of a short-term debt ceiling hike that would buy Congress time to hammer out a broader fiscal agreement. The Treasury Department has set Oct. 17 as the date at which the U.S. government can no longer borrow money, and is advocating for a longer-term debt ceiling raise.

Following his speech, Sperling declined to comment on the president’s current thinking on the GOP’s proposal.

“I don’t want to make any comments at all because … we’re just being cautious right now,” he said.